Citribel N.V. v. United States

2025 CIT 110

• Court: United States Court of International Trade
• Decided: August 22, 2025
• Docket: 24-00010
• Status: Published

Opinion

Slip Op. 25-110

UNITED STATES COURT OF INTERNATIONAL TRADE

Court No. 24-00010

CITRIBEL NV, Plaintiff, v. UNITED STATES, Defendant, and ARCHER DANIELS MIDLAND COMPANY; CARGILL, INCORPORATED; and PRIMARY PRODUCTS INGREDIENTS AMERICAS LLC, Defendant-Intervenors.

Before: M. Miller Baker, Judge

OPINION

[The court remands for Commerce to reconsider its cal- culation of the costs of production.]

Dated: August 22, 2025

Daniel J. Cannistra and Pierce J. Lee, Crowell & Mor- ing LLP, Washington, DC, on the briefs for Plaintiff.

Brian M. Boynton, Principal Deputy Assistant Attor- ney General; Patricia M. McCarthy, Director; Tara K. Ct. No. 24-00010 Page 2

Hogan, Assistant Director; Ravi D. Soopramanien, Trial Attorney, Commercial Litigation Branch, Civil Division, U.S. Department of Justice, Washington, DC, on the briefs for Defendant. Of counsel on the briefs was Shanni Alon, Attorney, Office of the Chief Counsel for Trade Enforcement & Compliance, U.S. Department of Commerce, Washington, DC.

Stephen P. Vaughn and Daniel L. Schneiderman, King & Spalding LLP, Washington, DC, on the briefs for De- fendant-Intervenors.

Baker, Judge: In this case involving an administra- tive review of an antidumping order on citric acid made in Belgium, a producer from that country chal- lenges the Commerce Department’s calculation of its costs of production. For the reasons explained below, the court remands for reconsideration. 1

I

To determine whether imported merchandise is dumped in this country, the Tariff Act of 1930, as amended, requires Commerce to make “a fair compar- ison” between the price charged by the foreign ex- porter to U.S. customers “and normal value.” 19 U.S.C.

1 In so doing, the court declines to redact certain confiden-

tial record material that it finds does not qualify as “busi- ness proprietary information” under the applicable Com- merce regulation, 19 C.F.R. § 351.105(c). See 19 U.S.C. § 1516a(b)(2)(B) (providing that the court “shall . . . pre- serve[୻] in any action under this section” the “confidential or privileged status accorded to any documents, comments, or information,” except that it “may disclose such material under such terms and conditions as it may order”). Ct. No. 24-00010 Page 3

§ 1677b(a). “Normal value” is generally “the price a producer charges in its home market.” U.S. Steel Corp. v. United States, 621 F.3d 1351, 1353 (Fed. Cir. 2010); see also 19 U.S.C. § 1677b(a)(1)(B)(i) (defining normal value by reference to home-market sales “in the ordi- nary course of trade”). The Department determines an antidumping margin based on the difference between the U.S. customer price and the normal value. See Ut- tam Galva Steels Ltd. v. United States, 997 F.3d 1192, 1194 (Fed. Cir. 2021).

In calculating normal value based on the home- market sales price, Commerce may disregard sales made for “less than the cost of production” when cer- tain conditions are met. 19 U.S.C. § 1677b(b)(1). This exclusion can significantly raise the normal value be- cause it eliminates lower-priced home-market transac- tions from the dataset, which results in an increased dumping margin. SeAH Steel Corp. v. United States, 704 F. Supp. 2d 1353, 1357 (CIT 2010). “The ‘sales be- low cost’ provision of § 1677b(b) thus assumes an im- portant role in many dumping determinations.” Id.

The statute defines the cost of production as “the sum of” three distinct categories of expenditures. 19 U.S.C. § 1677b(b)(3). As relevant here, one of those is “the cost of materials and of fabrication or other pro- cessing of any kind . . . during a period which would ordinarily permit the production of that” commodity. Id. § 1677b(b)(3)(A). The Department must base its calculations on “the records of the exporter,” so long as they “are kept in accordance with the generally ac- cepted accounting principles of the exporting country . . . and reasonably reflect the costs” of production and Ct. No. 24-00010 Page 4

sale. Id. § 1677b(f)(1)(A). It must “consider all availa- ble evidence on the proper allocation of costs.” Id.

II

In 2018, Commerce imposed antidumping duties on citric acid from Belgium. 83 Fed. Reg. 35,214. In 2022, the Department opened an administrative review of this order as to Citribel NV, a producer and exporter, covering July 1, 2021, to June 30, 2022. 87 Fed. Reg. 54,463, 54,465.

One of the agency’s tasks was to calculate normal value in Belgium. In that exercise, it sought to filter out Citribel’s home-market sales that were at less than the cost of production. Appx1276c. It thus asked the company for information about its “cost of manufactur- ing,” defined as “cost of materials, labor, variable over- head, and fixed overhead incurred to produce the fin- ished goods.” Appx4410.

In response, Citribel reported these expenses on a quarterly basis. See Appx1693–1694. The company acknowledged that Commerce ordinarily uses “normal cost averaging over the entire” period of review, Appx1693—referred to by the parties as “annualiza- tion” or “normalization.” But “in situations where” do- ing this “would be distortive due to significant cost changes,” the agency uses quarterly calculations. 2 Id.

2 The company also identified the “two primary criteria”

the Department employs to determine when to deviate from using annualized costs: “(1) the change in the [cost of manufacturing] is at least 25 percent between the high[୻] (footnote continues on next page) Ct. No. 24-00010 Page 5

Citribel argued that because its cost of manufacturing “changed drastically” during the relevant period, the Department should accept the tendered figures. Id.

Commerce answered by directing the company to resubmit its “conversion” costs—defined as the cost of manufacturing except for raw material inputs, see ECF 28-2, at 7—on an annualized basis. Appx4825. Citribel acquiesced. Appx1932–1933. In doing so, it acknowledged that the Department prefers annual- ized conversion costs “regardless of whether” the agency uses its “normal annual average cost method or [its] alternative quarterly cost method.” Appx1890 (quoting I&D Memo at Comment 14 accompanying 86 Fed. Reg. 58,883) (Yarn from Thailand). This is be- cause such costs “are normally incurred erratically throughout a given year.” Id. (quoting Yarn from Thai- land I&D Memo at Comment 14). That is, “they may be recorded at different rates from month to month throughout a given year.” Id. (quoting Yarn from Thai- land I&D Memo at Comment 14).

Even so, Citribel asked the agency to use the quar- terly conversion cost data that the company originally submitted. Appx1892. It pointed to various price in- creases, including a 50-percent rise in the price of nat- ural gas—“one of the three most significant inputs for citric acid production.” Appx1891.

period and the low[୻] period, and (2) there is a reasonably positive correlation between the [cost of manufacturing] and the sales price.” Id. Ct. No. 24-00010 Page 6

The Department then requested yet more infor- mation, and Citribel in response once again acknowl- edged that Commerce “prefers [annualized] data” for conversion costs. Appx2007. It contended, however, that the agency should use the company’s quarterly figures because the changes resulted not from ex- penses being “recorded at different rates but rather [from] significant increases in the price levels for all of those factors of production,” Appx2008, including more-than-50-percent price increases for natural gas and electricity, Appx2006. Disregarding them “by ‘nor- malizing’ or averaging the costs over the entire [period of review] would result[୻] in a serious distortion in Commerce’s margin calculation.” Appx2008.

In its preliminary results, Commerce declined that request and applied its “standard methodology of us- ing annual weighted-average costs based on Citribel’s reported data.” Appx1276c. In an accompanying memo, it explained that in determining whether to de- part from that methodology, the agency considers

(1) whether the change in the cost of manufac- turing . . . recognized by the respondent during the [period of review] is . . . greater than 25 per- cent . . . from the high to the low quarter[୻]; and (2) whether the record evidence indicates that sales made during the shorter averaging periods were reasonably linked with the [cost of manu- facturing] during the same shorter averaging periods.

Appx1021. Ct. No. 24-00010 Page 7

The Department acknowledged Citribel’s evidence that the company “experienced significant changes in the total cost of manufacturing . . . during the [period of review] and that the change[s] in” conversion costs were “primarily attributable to the price increases of energy and inflation.” Id. The agency asserted that it “analyzed the effect these cost increases had” between the quarters with the lowest and highest costs of man- ufacturing. Id. They did not meet the necessary 25- percent threshold under the first prong of Commerce’s alternative approach, id.—which was based on annu- alized conversion cost data and quarterly raw material expenditures. 3 Therefore, it applied its “standard methodology of using annual costs based on the [com- pany’s] reported data.” Id.

In its case brief, Citribel again argued that the De- partment should use the company’s quarterly conver- sion figures for purposes of the alternative methodol- ogy. Appx4226. It pointed to macroeconomic effects that it contended distorted the annualized data. Appx4228–4236. Of particular note was that “[t]he

3 It’s not obvious from the agency memo that Commerce

used these different calculations for the first prong of its alternative methodology test. In its final determination, however, the Department acknowledged that its test em- ploys “annualized conversion costs” along with quarterly “direct material costs.” Appx1287–1288; see also Yarn from Thailand I&D Memo at Comment 14 (explaining that re- gardless of whether the Department applies its normal or alternative methodology, it ordinarily uses annualized con- version costs). The effect of so annualizing them here was to eliminate any increases for purposes of the 25-percent threshold. Ct. No. 24-00010 Page 8

prices of natural gas and electricity increased by 50%.” Appx4232. It also asserted that the change in cost of production during the period of review exceeded the 25-percent threshold when quarterly numbers were used. Appx4229–4230. It asserted that Commerce’s annualization disregarded “the effect of changing con- version costs.” ECF 28-2, at 10; Appx4230–4231.

The Department rejected these contentions in its fi- nal determination, explaining that “Citribel does not deny that its cost data fails to meet” the first prong of the alternative methodology’s test. Appx1288. The company also did not carry its burden to show that the agency’s policy of only using annualized conversion costs was distortive or unreasonable. Id. Thus, Com- merce “continued to rely” on the annualized conversion figures for the final determination. Appx1285. Conse- quently, some of the company’s home-market sales were not included for purposes of calculating normal value, which increased it and thus the ultimate dump- ing margin.

III

Invoking jurisdiction conferred by 28 U.S.C. § 1581(c), Citribel brought this suit under 19 U.S.C. § 1516a(a)(2). ECF 11, ¶ 4. Three domestic producers intervened on the side of the United States. The par- ties have fully briefed Plaintiff’s motion for judgment on the agency record, 4 which is ripe for decision.

4 They also submitted supplemental briefing requested by

the court. Ct. No. 24-00010 Page 9

In § 1516a(a)(2) actions, “[t]he court shall hold un- lawful any determination, finding, or conclusion found . . . to be unsupported by substantial evidence on the record, or otherwise not in accordance with law.” 19 U.S.C. § 1516a(b)(1)(B)(i). The question is not whether the court would have reached the same deci- sion on the same record. Rather, it is whether the ad- ministrative record as a whole permits Commerce’s conclusion:

Substantial evidence has been defined as more than a mere scintilla, as such relevant evidence as a reasonable mind might accept as adequate to support a conclusion. To determine if substan- tial evidence exists, we review the record as a whole, including evidence that supports as well as evidence that fairly detracts from the sub- stantiality of the evidence.

Nippon Steel Corp. v. United States, 337 F.3d 1373, 1379 (Fed. Cir. 2003) (cleaned up); see also SSIH Equip. S.A. v. U.S. Int’l Trade Comm’n, 718 F.2d 365, 382 (Fed. Cir. 1983) (if Commerce makes a choice be- tween “two fairly conflicting views,” the court may not substitute its judgment even if its view would have been different “had the matter been before it de novo”) (quoting Universal Camera Corp. v. NLRB, 340 U.S. 474, 488 (1951)).

The court also reviews determinations to ensure the agency engaged in “reasoned decisionmaking,” meaning its result must be “within the scope” of its au- thority and “the process” it uses to reach that outcome “must be logical and rational.” Michigan v. EPA, 576 Ct. No. 24-00010 Page 10

U.S. 743, 750 (2015). Reasoned decisionmaking re- quires the agency to “examine the relevant data and articulate a satisfactory explanation . . . including a rational connection between the facts found and the choice made.” Motor Vehicle Mfrs. Ass’n of U.S., Inc. v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 43 (1983) (cleaned up). But courts will “uphold a decision of less than ideal clarity if the agency’s path may reasonably be discerned.” Id.

IV

Citribel first argues that the agency’s use of annu- alized conversion costs “directly contradicts the statu- tory language” dictating the method of calculating the cost of production. ECF 28-2, at 18–19 (citing 19 U.S.C. §§ 1677b(b)(1), (b)(3)). It claims that this approach does “not account for any change in” those expenses, id. at 18, and thus contravenes the statute because that practice conflicts with the goal of obtaining “the most accurate dumping margins possible,” id. at 19 (quoting Shandong Huarong Gen. Corp. v. United States, 159 F. Supp. 2d 714, 719 (CIT 2001)).

To begin with, it is not true as a mathematical mat- ter that annualizing conversion costs disregards “any change.” Id. at 18 (emphasis added). For purposes of calculating the cost of production, normalizing conver- sion costs across quarters still incorporates those ex- penses the same as inclusion of any other input in the formula as the statute requires.

Citribel, though, is correct that for purposes of Commerce’s alternative methodology, averaging con- Ct. No. 24-00010 Page 11

version costs across quarters effectively ignores in- creases in those expenses. As a result, only significant changes in raw material costs—which the agency com- putes on a quarterly basis—could affect the difference between the lowest and highest quarterly costs of manufacturing. See id. at 14. But that results from Commerce’s choice to annualize conversion expendi- tures.

The company admits that the statute provides “no guidance about whether Commerce may use average costs for the entire period of review or shorter periods such as quarters.” Id. at 12; cf. Pastificio Lucio Garofalo, S.p.A. v. United States, 783 F. Supp. 2d 1230, 1235 (CIT 2011) (“[T]he statute does not pre- scribe a specific time period over which cost of produc- tion must be calculated.”). Instead, it delegates that authority to Commerce. Thus, the Department has the discretion to calculate conversion costs on an annual- ized basis, even if it uses a quarterly calculation scheme for raw material inputs. 5

Precisely because of this statutory delegation, Citribel’s invocation of Loper Bright Enterprises v. Raimondo, 603 U.S. 369 (2024), is unavailing. That de- cision “did not throw out the administrative discretion baby with the Chevron deference bathwater.” BYD (H.K.) Co. v. United States, Slip Op. 25-60, at 29, 2025 WL 1420318, at *11 (CIT 2025) (citing Pickens v. Ham- ilton-Ryker IT Sols., LLC, 133 F.4th 575, 587 (6th Cir.

5 Of course, whether that discretion is exercised reasonably

in any given case is another matter, as discussed below. Ct. No. 24-00010 Page 12

2025) (Sutton, C.J.)), appeal pending, No. 25-1937 (Fed. Cir.).

Citribel next implies that it was blindsided by Com- merce’s request that the company resubmit its conver- sion costs in annualized form. See ECF 28-2, at 21–25. It complains that the Department didn’t explain its reasons for that request until the final determination. Id. at 24. That “deprived [the company] of a meaning- ful opportunity to make effective arguments against” such an approach, which it erroneously characterizes as a presumption.6 Id. at 25.

Citribel’s claim that it was surprised to learn of Commerce’s practice of always annualizing conversion costs asks the court to suspend disbelief. When the company grudgingly resubmitted its data for these ex- penses in annualized form as directed, it acknowl- edged that format was the Department’s preference “regardless of whether” the latter uses its “normal an- nual average cost method or [its] alternative quarterly

6 A presumption is “[a] legal inference or assumption that

a fact exists because of the known or proven existence of some other fact or group of facts.” Presumption, Black’s Law Dictionary (12th ed. 2024). Its essential characteristic is that it “shifts the burden of production or persuasion to the opposing party, who can then attempt to overcome the presumption.” Id. Here, by contrast, the agency shifts no burden and requires no extra production or persuasion. In- stead, there is just the Department’s policy and the justifi- cations therefor. Thus, the question, as in all cases brought under 19 U.S.C. § 1516a(a)(2), is simply whether Com- merce’s determination is supported by substantial evidence and otherwise reasonably explained in light of the record and the parties’ contentions. Ct. No. 24-00010 Page 13

cost method.” Appx1890 (emphasis added) (quoting Yarn from Thailand I&D Memo at Comment 14). Con- trary to its argument, Citribel had “a meaningful op- portunity to make effective arguments” against the agency’s policy of using annualized conversion costs. See ECF 28-2, at 25.

Finally, the company contends that the Depart- ment failed to substantively address its argument that annualizing conversion costs on these facts yielded a distortive result. See id. at 26–30. 7 It points to record evidence that it says shows an actual increase in con- version costs rather than reporting fluctuations that the Department’s annualization policy assumes. ECF 28-2, at 26–28; see also ECF 58, at 14–21 (supple- mental briefing); cf. Appx1287 (the agency’s final de- termination explaining that “conversion costs, such as labor, energy, and overhead, are normally incurred er- ratically throughout a given year” and “using an an- nual average for these costs normalizes [them] over the entire year”) (emphasis added). Citribel’s point is that its evidence showed that this period of review— punctuated as it was by the geopolitical and economic earthquake of the Russian invasion of Ukraine in Feb- ruary 2022, which triggered a surge in European nat- ural gas and electricity prices, Appx1911—was any- thing but normal, at least for certain of its expenses.

7 Citribel “does not dispute that Commerce’s policy” of al-

ways annualizing conversion costs “may be reasonable where its foundational assumptions actually apply.” ECF 58, at 17. Ct. No. 24-00010 Page 14

Echoing Commerce, the government argues that “Citribel was required to show, using evidence on the record, that the standard cost methodology leads to a distortive result.” ECF 33, at 34 (citing Habaü Sinai ve Tibbi Gazlar Istihsal Endüstrisi, A.û. v. United States, 361 F. Supp. 3d 1314, 1327 (CIT 2019)). It claims “Citribel did not do so.” Id.

The problem for the government is that the com- pany put on considerable evidence and argued at length why annualization of its conversion costs on these facts “leads to a distortive or unreasonable result in the cost test and/or margin analysis.” Appx1288. Commerce’s response, however, was limited to a single conclusory sentence: “Citribel’s argument fails to show that the standard methodology was ‘unreasonable’ and failed to provide such record evidence.” Id. How and why the Department reached this conclusion is a mys- tery. 8 Cf. State Farm, 463 U.S. at 43 (an agency must “examine the relevant data and articulate a satisfac- tory explanation . . . including a rational connection between the facts found and the choice made”); see also 19 U.S.C. § 1677b(f)(1)(A) (requiring the agency to “consider all available evidence on the proper alloca- tion of costs”) (emphasis added).

8 The agency’s memo accompanying its preliminary deter-

mination similarly dodged engaging with Citribel’s conten- tion that using annualized conversion data on this record produced distortive results. There, it claimed—with no fur- ther elaboration—that it “analyzed the effect” of the com- pany’s conversion cost increases, Appx1021, which was not responsive. Ct. No. 24-00010 Page 15

Commerce’s practice of always annualizing conver- sion costs is merely a means to the end of avoiding dis- torted cost calculations, not an end in itself that over- rides the statute’s directive to “achieve a fair compari- son” between normal value and export price. 19 U.S.C. § 1677b(a). 9 Here, Citribel has made the case, includ- ing by pointing to record evidence, that following this approach on these peculiar facts is distortive because of the extraordinary rise in at least certain conversion costs (e.g., natural gas and electricity) during the pe- riod of review. The Department dismissed that conten- tion without any analysis or discussion of the com- pany’s evidence. Cf. Henry J. Friendly, Some Kind of Hearing, 123 U. Pa. L. Rev. 1267, 1292 (1975) (“The necessity for justification is a powerful preventive of wrong decisions.”). On remand, the agency must con- sider Citribel’s various conversion expenses and deter- mine whether, as the company says, annualization of some or all of them produces distorted results. 10

9 This goal is itself an important check Congress has imple-

mented to ensure the agency obtains “the most accurate dumping margins possible.” Shandong Huarong, 159 F. Supp. 2d at 719. 10 Perhaps Citribel incurred some or most of its conversion

costs erratically, as the Department’s practice assumes. But that is no reason to annualize other such costs that the company demonstrates were not so incurred and where normalization would produce distorted results. Ct. No. 24-00010 Page 16

* * *

The court grants Citribel’s motion for judgment on the agency record (ECF 28) and remands for further proceedings consistent with this opinion.

Dated: August 22, 2025 /s/ M. Miller Baker New York, NY Judge